If New Zealand can ban zero hour contracts why can't we?

11 Mar 2016 Nick Garbutt    Last updated: 11 Mar 2016

This week New Zealand became the first country in the western world to ban zero hour contracts. Scope examines the issues. 

The decision to ban zero hour contracts in New Zealand could turn out to be a watershed moment. It was prompted by a campaign run by Unite the Union and the motion was proposed by an opposition Labour MP but received all party support and was passed unanimously.

New Zealand is not a left wing country: since 2008 it has been governed by a coalition led by the centre right National Party, which is committed to cutting public spending.

The bill, which will take effect on 1 April, stipulates that employers must guarantee a minimum number of hours work each week, and workers can refuse extra hours without repercussions.

“The passing of this Bill delivers on the government’s commitment to improve New Zealand’s employment law framework to encourage fair and productive workplaces without imposing unnecessary compliance costs on employers in general,” said Michael Woodhouse, the workplace relations and safety minister.

The new law will re-ignite the debate here just in time for our forthcoming Assembly Elections.

Stephen Farry, the DEL Minister carried out a consultation on the issue which concluded last February. He estimated that there were around 28,000 people in Northern Ireland on zero hour contracts at that time.

He decided not to recommend a ban. Civil servant Tom Evans told the DEL committee: “The Minister has looked at the issue in detail and he recognises that zero-hours and non-guaranteed hours can support business flexibility, make it easier to employ staff and provide pathways to employment for young people and other jobseekers, and that an outright ban would have a disproportionate impact on flexibility in the economy and could remove employment opportunities.”

Much of this reasoning appears to have been based on consultation with employers. Later in the session Mr Evans admitted that although almost 40% of those on zero hour contracts are aged between 16 and 24 no specific research had taken place with organisations that deal with young NEET people although there was to be a meeting with Include Youth.

So present policy is that zero hours contracts stay in Northern Ireland but the law has been tightened to prevent “exclusivity” clauses being imposed on employees that prevent them working elsewhere.

An attempt last month to amend the Bill by Sinn Fein MLAs  Phil Flanagan, Bromwyn McGahan and Fra McCann to ban zero contracts outright was voted down by the Northern Ireland Assembly. 


Since Dr Farry’s decision the number of zero hour contracts have risen by just under 19%, according to the Office of National Statistics. There are no figures for Northern Ireland, but extrapolating from Farry’s own that would mean the number here now stands at around 33,000: in electoral terms a sizeable voting bloc.

DEL’s research that led to the decision appears not to have sufficiently considered the evidence on the impact of such contracts: impacts that will appear to many much more compelling than guaranteeing “flexibility” for employers.

First of all those affected are in a situation where they do not know from one day, week, or month to the next how much they will earn. Such economic instability: not knowing if you can pay the bills from month to month causes deep stress. Social scientists have named this growing group the “precariat” and have noted high incidence of both mental and physical ill health. In the case of physical ill health, high levels of stress affect the body’s immune system making people more vulnerable to illness.

There was no mention of this in Mr Evans’s presentation to the DEL committee.

Likewise another factor was not mentioned. Nobody can actually live on zero hour contracts, which, for many are pitched at the lowest possible wage. That means that those who qualify will almost invariable be welfare and housing benefit recipients.

What this in turn means is that “flexible” employment practices are being funded by taxpayers.. In 2012-13, the latest figures available, the taxpayer gifted the corporate sector £93 billion a year. 

This in turn feeds directly into profits: the subsidy provided by tax payers boosts companies’ profits, and ends up in the pockets of shareholders and senior managers via bonuses. Zero hour contracts therefore represent a corporate subsidy that increases the gap between the wealthy and the poor.

It also makes those who exist on zero hour contracts both mentally and physically ill with the attendant cost of treatment.

The reality is that there is another way of looking at the  “sound” economic argument for such “business flexibility” – one that concludes that its inexorable logic is that we have a collective moral imperative to widen the gap between the rich and the poor and further diminish the life chances of vulnerable young people.

The debate needs to be widened still further: do we really want a precariat, with all the attendant dangers this poses to both personal and political stability? And is it responsible for politicians here and in the rest of the UK to enact policies which grow this new underclass of people who are condemned to live from hand to mouth. 

Politicians of all ilks in New Zealand have abolished what they see as an exploitative practice. A similar debate needs to take place here.


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